These have the potential to wipe out value left in the law firm and will have to be dealt with by the so far undisclosed new owners, those who bought cheaply $680 million of loans held by the original banking syndicate lenders.

These players are about to do a debt for equity swap which will put them firmly in control.

Shares fell 95% between April 2015 and February 2016, losing shareholders more than $2 billion.

Questions have also been raised about Slater and Gordon’s $1.3 billion acquisition of the Professional Services Division of Quindell in the UK which hasn’t performed as expected.

Some of the big institutional investors in Slater and Gordon are reported to be joining the action.

The statement of claim alleges Slater and Gordon made false and misleading statements, engaged in misleading and deceptive conduct and breached its continuous disclosure obligations to shareholders.

Matt Hall, a Slater and Gordon shareholder, is leading the class action on behalf of the thousands of aggrieved shareholders.

“As an investor in listed Australian companies, I rely on the timely disclosures that listed companies make, and I act on primary information coming out of companies, such as the repeated positive disclosures Slater and Gordon made to investors,” says Hall.

“When those disclosures aren’t accurate, or are misleading, the result can be devastating for individuals who invest as I do, and for individuals that are directly affected when their fund managers lose out because the market isn’t properly informed or properly priced.”

The claim is for about $250 million, or about five times the company’s market capitalisation today.

In December, the company was served by ASIC with two notices to produce documents from between December 2014 and September 2015.

“The ASIC investigation seeks to determine whether those financial records and accounts were deliberately falsified or manipulated,” Slater and Gordon said in a statement.

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